Minnesota Mining & Mfg. Co. v. Williamson

• Decision Date: 31 July 1984
• Docket Number: 13279,Nos. 13273,s. 13273
• Citation: 675 S.W.2d 951
• Parties: MINNESOTA MINING & MANUFACTURING COMPANY, a Corporation, Plaintiff-Appellant-Respondent, v. Ken WILLIAMSON, Defendant-Respondent-Appellant.
• Court: Missouri Court of Appeals

Page 951

675 S.W.2d 951

MINNESOTA MINING & MANUFACTURING COMPANY, a Corporation Plaintiff-Appellant-Respondent, v. Ken WILLIAMSON, Defendant-Respondent-Appellant.

Nos. 13273, 13279.

Missouri Court of Appeals,

Southern District,

Division One.

July 31, 1984.

Motion for Rehearing or to Transfer

Denied Aug. 21, 1984.

Application to Transfer Denied

Oct. 9, 1984.

John T. Martin, Sam L. Colville, Dennis R. Dow, Kansas City, Donald R. Duncan, Springfield, for plaintiff-appellant-respondent.

Donald E. Bonacker, Springfield, for defendant-respondent-appellant.

FLANIGAN, Presiding Judge.

Plaintiff Minnesota Mining & Manufacturing Company, a corporation, (3M), a manufacturer of automotive products, sued its former "Automotive Redistributor," defendant Ken Williamson, for the balance of an unpaid account. Williamson filed a counterclaim seeking damages by reason of 3M's intentional interference with "an active business contractual relationship" which Williamson had with Sid Greenburg Sales Company of St. Louis, Missouri (Greenburg). The jury awarded 3M $23,961.45 on the petition and awarded Williamson $60,000 actual damages and $200,000 punitive damages on the counterclaim. Both sides appeal. 3M's appeal will be considered first.

Under Missouri law the elements of a cause of action for tortious interference with business relations, as stated in Fischer, Etc. v. Forrest T. Jones & Co., 586 S.W.2d 310, 315 (Mo. banc 1979), are:

"(1) A contract or a valid business relationship or expectancy (not necessarily a contract);

(2) Defendant's knowledge of the contract or relationship;

(3) Intentional interference by the defendant inducing or causing a breach of the contract or relationship;

(4) The absence of justification; and

(5) Damages resulting from defendant's conduct."

3M asserts that the evidence is insufficient to support the verdict on the counterclaim because there was a failure of proof with respect to elements 3, 4, and 5. For the reasons which follow, this court holds that there was a failure of proof with respect to element (4), the absence of justification, and it is unnecessary to consider whether there was a similar failure with respect to elements (3) or (5).

In determining whether Williamson made a submissible case on his counterclaim, this court must view the evidence in the light most favorable to Williamson and give him the benefit of all inferences which may reasonably be drawn and which support the counterclaim. Smith v. Allied Supermarkets, Inc., 524 S.W.2d 848, 849 (Mo. banc 1975). Williamson had the burden to produce substantial evidence supporting every element of his cause of action. No fact essential to submissibility may be inferred in the absence of a substantial evidentiary basis. Tri-Continental Leasing Co. v. Neidhardt, 540 S.W.2d 210, 211 (Mo.App.1976). There are few, if any, material conflicts in the evidence concerning the counterclaim, and most of it was introduced by Williamson.

In order to comply with anti-trust laws, including the Robinson-Patman Antidiscrimination Act, 15 U.S.C.A. § 13 et seq., 3M employs a distribution system which involves "functional pricing" of its products. 3M sells its products for the same price to all distributors who perform the same function in the distribution network. The 3M products involved in this litigation are ordinarily used in the maintenance, repair, or refinishing of automobiles. The ultimate consumer of these products is usually an automobile body shop.

One method of distribution is for 3M to sell the goods to a warehouse distributor who resells to a jobber who resells to a body shop. The warehouse distributor pays 3M 90 percent of the price which 3M would charge the jobber if 3M by-passed the warehouse distributor and sold directly to the jobber. Such by-passing is permissible.

Williamson was not a warehouse distributor but was an "automotive redistributor," a hybrid category acting at times as a warehouse distributor and at times as a jobber. Williamson performed the function of a warehouse distributor when he sold to jobbers. Unlike a warehouse distributor, however, Williamson was at liberty to sell directly to the body shops, by-passing a jobber. Thus, for Williamson, two possible methods of distribution existed; the two-step method (3M sells the goods to Williamson who resells to a body shop) and the three-step method (3M sells the goods to Williamson who resells to a jobber who resells to a body shop). In the three-step method, Williamson was entitled to receive a 10 percent discount from 3M. In the two-step method, Williamson received no discount.

Although a warehouse distributor and Williamson each received a 10 percent discount on their sales to jobbers, there was a difference in the way 3M gave that discount. Since the warehouse distributor sold only to jobbers, 3M granted him initially a 10 percent discount by charging him 90 percent of the price which 3M charged a jobber to whom 3M made a direct sale. On the other hand, since Williamson sold both to jobbers and to body shops, 3M would charge Williamson, on all of the original billings, the full price of the goods. Williamson would then sell a portion of the goods to jobbers and a portion to body shops. Williamson would send monthly reports to 3M of his sales to jobbers and 3M would give him a 10 percent discount on those sales.

On February 20, 1974, 3M and Williamson, who was doing business as an individual under the fictitious name of "Central Warehouse Distributors," entered into a written "Automotive Redistributor's Agreement," supplemented by a "Statement of Policy for Automotive Trades Redistributors." Taken together, those documents included the following, somewhat paraphrased, provisions:

1. Williamson was appointed an automotive redistributor. An automotive redistributor maintains an adequate warehouse inventory of goods and delivery facilities "to promptly and adequately service jobbers from his stock." The automotive redistributor ships to, invoices, and carries credit of his jobber accounts. 3M has the privilege to inspect the automotive redistributor's records to confirm the accuracy of the monthly reports reflecting sales to jobbers on which the discount is allowed.

2. A jobber is one who is customarily engaged in the sale of products to body shops. Neither the automotive redistributor nor the jobber to whom the redistributor sells 3M goods has more than a minimal ownership interest in the other.

3. Williamson acts pursuant to the 3M merchandising plan (the distribution system, including functional pricing and the two-step and three-step methods previously outlined).

4. Williamson will submit monthly reports to 3M showing all resales by Williamson to jobbers.

5. All shipments of goods, sold by 3M to Williamson, shall be made to the warehouse of Williamson.

6. Conditions were set forth concerning the return by Williamson to 3M of goods which Williamson no longer wanted. The conditions varied, depending upon whether the unwanted stock of goods was created by 3M's error or by Williamson's error, or whether the goods were "slow moving" or were "new products." Depending upon the situation, Williamson might return the goods at 100 percent credit or incur a restocking charge of 15 percent. In some situations 3M would pay the cost of return and in others Williamson would bear that cost.

7. "3M has no exclusive redistribution arrangements." Williamson may sell 3M products to any customer anywhere and 3M has no control over Williamson's prices. The agreement was terminable, at the option of Williamson or 3M, upon the giving of written notice.

Although Williamson conducted his redistributorship both in Springfield and at a nearby rural location, his operation was essentially Springfield-based. The Williamson-Greenburg relationship, the subject of the counterclaim, commenced in the fall of 1978. Greenburg was a jobber who for years had been dealing in 3M goods. Greenburg's place of business was in the St. Louis area, only two or three miles from 3M's St. Louis warehouse. Prior to his dealings with Williamson, Greenburg had purchased 3M products from Missouri Glass Distributors, a warehouse distributor for 3M. After Missouri Glass went out of business, conversations took place among 3M, Williamson, and Greenburg with regard to Greenburg buying 3M products through Williamson.

On November 15, 1978, C.P. Crockett, 3M's area sales manager in St. Louis, wrote a letter to Williamson outlining the procedure for the handling of sales of 3M products through Williamson to Greenburg. Paraphrased, the letter said: Williamson would receive an order from Greenburg and would transmit same to John Powell, a 3M employee in St. Louis. The Williamson order would list sales to Greenburg only--no other customer--and would be in minimum quantities of 75 cases. The Williamson order could be preceded by a telephone call to Powell, with three days' notice recommended. After 3M had the order prepared for shipment, 3M "can hold for will-call and [Powell] will call [Greenburg] indicating the order is ready for pickup." 3M would bill Williamson for the goods and Greenburg would have the authority to pick up the goods at the 3M St. Louis warehouse.

Although occasionally Williamson would pick up a Greenburg order at the 3M facility in St. Louis and deliver it to Greenburg, usually Greenburg himself would take delivery at the 3M dock. On occasion Williamson would deliver 3M goods to Greenburg in the 3M parking lot. At times Greenburg initiated the order to Powell. After the order was assembled, Powell would telephone Greenburg indicating the order was ready for pickup, either by Williamson or Greenburg. This procedure was called a "will-call," or a "drop-shipment," or "drop-ship," as distinguished from the normal situation where 3M shipped to the redistributor's warehouse. Williamson was billed by and paid 3M. Greenburg was billed by and paid Williamson.

The arrangement between...